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NOVEMBER 10,  2011

SHORT TAKES ON THE DRIFTING WRECKAGE – AT 8:31 P.M. ET:

CAIN, THE UPDATE – It doesn't stop.  Now Herman Cain is under attack for calling Nancy Pelosi "Princess Nancy" during the debate last night.  He's apologized, but some commentators, like Gloria Borger and Donna Brazille on CNN, claim it represents his attitude toward women.  I don't think so, but the story must be milked. At the same time, conservative writer Ann Coulter has noticed something that's been overlooked – that the women who've come forward to accuse Cain all trace their alleged contact with him to the three years he spent at the National Restaurant Association.  Cain is 65.  What happened during the other 62 years?   Why no charges?  Coulter points out that all the women also originate in Chicago, the political base of one Barack Obama, and that David Axelrod and the Chicago machine have a history of digging out sex accusations against anyone they oppose.  Hmm.  Where there's smoke, is there fire?  I'm not sayin', I'm not sayin'.   

CHAVEZ GOING? – It's reported that Venezuelan strongman Hugo Chavez, a devoted enemy of the United States and an ally of Iran, is fading fast.  Chavez is a cancer patient.  Roger Noriega, former U.S. ambassador to the Organization of American States (OAS) reports that doctors treating Chavez don't expect him to live more than six months.  Chavez, by contrast, has announced that he's been healed.  Noriega also reports that Chavez has chosen a course of treatment designed, not to truly fight his disease, but to keep him functioning publicly.  There is no informed speculation that I've read as to who would take Chavez's place when he dies.  We would hope, of course, that the close relationship between Venezuela and Iran would end.

BOTCHING IRAN – It's hard to accept it, but France is taking a tougher line on the Iranian nuclear program than is our own government.  A French foreign policy official said today that France takes the new UN report on Iranian nuclear development very seriously and is prepared to propose tough, non-military action.  At the same time, the official said that if Israel decided to attack, France would "understand," a kind of wink-and-nod green light.  American officials are making confusing, weak statements.  Secretary of Defense Panetta, basically a good guy, gave a public comment outlining all the bad things a military attack on Iran could produce.  He may well have made some good points, but by seeming to take an attack off the table, it weakens our hand generally, and makes us look like the second-rate power Obama is turning us into.  If I were in Tehran, I'd be pleased.

REAL CLASS – The occupy movement, some of whose members actually raised some thoughtful points in the movement's first days, is degenerating into the same old 1960s story – a movement controlled by radical, adolescent elements.  CBS is reporting that a new "occupy" plan calls for crashing the Rose Parade in Pasadena on New York's Day.  As you know, the Rose Parade is a serious threat to the republic and equal rights.  One of the complaints of the organizers is the "militarization" of the parade.  Yes sirree, all America will be demanding war once a Marine band marches by, especially if it's playing the militaristic "America the Beautiful."  Geez.

November 10, 2011       Permalink 

ITALY AND EUROPE ON THE BRINK – AT 9:40 A.M. ET:  Have you noticed that the European economic crisis is "solved" one week, and comes back the next?  Weren't these Europeans the ones who endlessly lectured George W. Bush on how to manage things?  Europe is a train wreck, and yet there are still "sophisticates" who think we should do things the European way. 

The European way is collapsing, and we will get part of the bill, inevitably.  From Britain's Telegraph:

Here we go. The European economy seems already to have gone over the edge of the cliff, and that's before any of the eurozone 17 has technically defaulted. This morning's industrial production figures from Italy were a disaster, with output down a staggering 4.8pc in September.

OK, so Italian IP tends to be quite volatile – the previous month was sharply up. But regrettably, it's part of a pattern, only the worst in a bad bunch. In the same month, French industrial production was down 1.7pc and German industrial output by 2.7pc. The "mild recession" predicted by Mario Draghi, the European Central Bank's new president, last week, may already be a very serious one.

Italy managed successfully to offload €5bn of one year bonds onto the markets this morning – albeit at a penalty interest rate – but this was never going to be the real test of continued market appetite for Italian paper. That comes next week, with the auction of longer dated five year bonds. The longer the maturity, the greater the perceived risk of default, so it's going to be tough.

The biggest part of Italy's problem in terms of market credibility is its politics. There are undoubtedly big problems with the economy, but Italy is not Greece. On some measures, Italian output is larger than that of the UK, household debt is low and there's plenty of hidden wealth. But it is weighed down by checks and balances, and its politics are of byzantine complexity, making decisive corrective action next to impossible.

COMMENT:  Europe is a day-by-day affair, with Greece now equipped with a new government, and Italy likely to have one in the days ahead. 

Ironically, it is Europe's financial problems, largely caused by social welfare states that cannot afford the welfare, that may bring down Obama in 2012.  A serious European recession will slow, or even reverse, America's recovery, giving Obama precious little to bring to the 2012 election table.  As we noted in the post below, labor figures are marginally improving, something that helps Obama.  But if Europe slips behind the recession curtain, those labor figures will start moving in the other direction.

November 10, 2011       Permalink

JOBLESS CLAIMS DECLINE – AT 8:51 A.M. ET:  While the improvement is again small, there does seem to be an improving trend in jobless claims, something that could substantially help President Obama.  From Bloomberg:

The number of Americans filing applications for unemployment benefits fell to the lowest level in seven months, a sign the recovery may be encouraging companies to limit cuts in headcount.

Jobless claims fell by 10,000 to 390,000 in the week ended Nov. 5, Labor Department figures showed today in Washington. The median forecast of economists in a Bloomberg News survey called for 400,000 new claims. The number of people on unemployment benefit rolls decreased, while those getting extended payments rose.

Waning dismissals pave the way for bigger gains in payrolls and in consumer spending, which accounts for about 70 percent of the economy. At the same time, a pickup in hiring is needed to cut the unemployment rate, which Federal Reserve officials predict will not drop below 8 percent until 2013.

“We need claims to stay below the 400,000 level for some time before we can be sure there’s improvement,” Sean Incremona, a senior economist at 4Cast Inc. in New York, said before the report. “There’s still a lot of work to be done. The pace of hiring isn’t enough to significantly reduce the unemployment rate.”

COMMENT:  We need longer-term reports to judge what's actually happening, but every bit of good news strengthens the Obama campaign. 

Of course, the decrease in unemployment claims does not, as the story noted, mean a reduction in the jobless rate.  This country must add 150,000 new jobs each month just to keep up with population growth, and it isn't doing that.  It isn't coming close.  But will the press use only the "good" figures during the 2012 campaign to give a boost to Obama, while playing down the bad?  Do you have any doubts?

November 10, 2011       Permalink

ROMNEY TALKS TOUGH – AT 8:29 A.M. ET:  I hope Mitt Romney doesn't flip-flop on this, because his stand on Iran is right on.  The likely GOP nominee is going after President Obama's utterly failed diplomacy on Iran, a failure that continues to this hour.

The administration is already sending out mixed signals after a devastating UN report on Iran essentially accused Tehran, for the first time, of developing nuclear weapons.  Yes, Washington said, it's a tough report.  But on the other hand...

And the other hand seems to be winning.  While Washington and its European allies go through the motions of toughening sanctions on Iran, administration leakers are warning that tougher sanctions can hurt the world economy and drive up oil prices.  Some European nations are ludicrously asking for a meeting of the UN Security Council to discuss Iran, knowing full well that any real action would be vetoed by Russia and China, making a discussion meaningless. 

And, of course, there are the familiar efforts to blame, not Iran for its behavior, but those who want to stop Iran.  Why, they could start a war. 

Romney is stalwart on this, and we hope he continues:

Mitt Romney is seizing on the latest report on Iran’s nuclear program to drive home his criticism of President Barack Obama’s “extraordinary record of failure” in dealing with Tehran, and vowing that he will have a “very real and very credible military option” in the region as president.

The Republican presidential hopeful warned in an op-ed published in the Wall Street Journal Thursday that Iran is “making rapid headway” toward developing nuclear weapons, and yet “rhetoric and policy have been sharply at odds” under the Obama administration.

 “A serious U.S. strategy to block Iran’s nuclear ambitions became an urgent necessity. But that is precisely what the administration never provided. Instead, we’ve been offered a case study in botched diplomacy and its potentially horrific costs,” Romney wrote, following the International Atomic Energy Agency’s recent warning about Iran’s nuclear program.

Romney vowed that as president, he would not only impose tougher economic sanctions on Tehran and speak out more forcefully against Iranian dissidents, but that he would also draft a stronger military plan to ensure that Iran abandons its nuclear ambitions.

“I will back up American diplomacy with a very real and very credible military option. I will restore the regular presence of aircraft carrier groups in the Mediterranean and the Persian Gulf region simultaneously,” he said. “I will increase military assistance to Israel and coordination with all of our allies in the region.”

And...

“Barack Obama has shredded his own credibility on Iran, conveyed an image of American weakness, and increased the prospect of a cascade of nuclear proliferation in the unstable Middle East,” he said. “The United States needs a very different policy.”

COMMENT:  Romney has stated it well.  But the overall reaction in Washington to the UN report on Iran has been disappointing.  The economy overwhelms every other issue.  It is a reminder of the 1930s, when the Great Depression made it difficult for Americans to focus on foreign threats.

November 10, 2011       Permalink

THE DEBATE – AT 7:49 A..M. ET:  Most of the chatter across the internet this morning, at least that dealing with the GOP debate last night, focused on Rick Perry's nightmarish memory lapse, during which he couldn't name the three government departments he wants to abolish.  It's pretty much assumed that this latest Perry gaffe has now finished him off as a 2012 candidate.  He did nothing else during the debate to save himself.

With voting in Iowa set to start in the first week in January, Republican voters are not being given any compelling reason to jump on board any campaign train.  Mitt Romney is the ostensible frontrunner, and I'm afraid he will win by default.  It must be conceded, though, that of all the candidates he seemed last night, as he has seemed before, the best prepared.

Can Romney defeat Obama?  I think it's a tough call, and one that will be decided by the actual state of the economy on election day.  Romney's flip-flopping on issues is clearly the factor that is already hurting him.  I'd imagine his campaign team is already working on ways to turn that around, possibly by focusing on Obama's history of flip-flops.

Another danger area for Romney is his apparent decision to stay under wraps as much as possible, inching toward the "inevitable" nomination.  He has now raised eyebrows by turning down an invitation from Fox News to appear on its 6 p.m. ET news program for an extended interview, something other candidates have done.  And he has yet to appear on Chris Wallace's "Fox News Sunday."  He can't keep doing this without antagonizing the press, even the conservative press.  Playing it safe may actually be playing it dangerously.

November 10, 2011     Permalink

NOVEMBER 9,  2011

SHORT TAKES ON THE DRIFTING WRECKAGE – AT 10:58 P.M. ET:

WILL DEBATE GAFFE SINK PERRY? – The Republican debate from Michigan tonight was routine and uneventful, but highlighted by a gaffe from Rick Perry.  Perry, who'd promised he'd abolish three Cabinet departments could not name all three when asked.  Perry rushed to reporters after the debate to concede he'd messed up.  The clip of the gaffe is now all over the internet and is here.  Perry just comes off as unprepared, once again.  I really don't think he's ready for prime time, at least not prime time debates.  This performance tonight will do him no good, and he needs a lot of good to get back in the race.

MAJOR SHOCKING NEWS – Eddie Murphy, who used to be a famous comedian, has withdrawn as host of the next Academy Award ceremonies in solidarity with his producer, Brett Ratner, who had to withdraw the day before because of an anti-gay slur and some bizarre behavior on a TV program.  Do you care?  Does anyone care?  The Oscar broadcast, years ago, had a certain veneer of class, and now it reached down to grab a has-been comedian at a time when fewer and fewer people are going to movies.  In ten years I expect to see the Oscar telecast, if there is one, on some minor cable channel.  Movie stars today are smaller than life, and an industry that used to be run by major showmen is today run by talent agencies, which in turn are populated by graduates of our "best" colleges who've never been on a movie set and couldn't recognize the script of "Casablanca."  What a comedown.

PENN STATE SCANDAL – Legendary football coach Joe Paterno and the president of Penn State, Graham Spanier, have been forced out in the light of allegations that they did too little to stop the sexual abuse of young boys by Jerry Sandusky, the former football defensive coordinator.  The two men clearly should have done more, and their departures are appropriate, even though it is sad to see Paterno's legendary coaching career end this way.  At the same time, the double standard in universities persists, as it does elsewhere in our society.  Please remember that there was not a single reprimand for members of the Duke University faculty who publicly called for what amounted to the legal lynching of three lacrosse players charged with rape, despite a lack of any real evidence that they'd committed any crime.  The three were eventually exonerated.  I guess it depends on which side of the politically correct fence you're on.

ISRAELI STRIKE? – Britain's Daily Mail is reporting that British intelligence chiefs expect an Israeli military strike on Iran, possibly as soon as Christmas or early next year.  The British Defence Ministry is already making plans should Britain decide to back any such attack.  The United States is ostensibly opposed to Israeli action, but it would be very difficult for President Obama to be seen as interfering with an Israeli attack, especially since, as we reported here, a number of Arab nations are apparently in favor of it, including Saudi Arabia.  I have doubts about the Daily Mail story, but there's no doubt the Iranian nuclear program, now accused by the UN of fostering atomic-bomb development, is very much on the international front burner.

November 9, 2011    Permalink

IRAN WEEK II – THE LITTLE BOMB – AT 8:42 A.M. ET:  This adds to our earlier post on the UN report concerning Iran's nuclear program.  From Bloomberg:

Iran continued working on nuclear weapons at least until last year, including efforts to shrink a Pakistani warhead design to fit atop its ballistic missiles, a report from United Nations inspectors said.

The International Atomic Energy Agency, drawing on evidence collected over eight years, reported yesterday that Iran carried out “work on the development of an indigenous design of a nuclear weapon including the testing of components.”

The document shows that Iran worked to redesign and miniaturize a Pakistani nuclear-weapon design by using a web of front companies and overseas experts, according to the report and an international official familiar with the IAEA’s probe. Such a warhead could be mounted on Iran’s Shahab-3 missile, which has the range to reach Israel, according to the IAEA.

COMMENT:  Shrinking a warhead has many uses other than mating the warhead to a missile.  The smaller the device, the more transportable it is.  The lighter the device, the more transportable it is with fewer people.  Our concern here centers on two possibilities:  1) the sailing of a nuclear device, in a small crate, into an American harbor, where it would be set off by a "martyr" (suicide) crew; 2) the smuggling of a small nuclear device across our southern border, from which it could easily be transported into an American city.  The work could be done by a terrorist group under Iranian control, and possibly based in Venezuela.

The future gets more and more precarious.  There are no guarantees that anything serious will be done to stop the Iranians.

November 9, 2011      Permalink

CAIN, THE SEQUEL, AVAILABLE NOW! – AT 7:48 A.M. ET:  Herman Cain struck back at a press conference yesterday, denying all the charges against him, while, as we noted, no particular facts.

We'll now see how badly he's been damaged in the polls, and we'll also see where this is going.  The latest breathless developments:

1.  Stories are building that attempts are being made to get all of Cain's accusers together for a gala press conference.  There are no reports yet of who the M.C. will be.

2.  One previously anonymous accuser has now identified herself, but it turns out that she has a history of making workplace complaints and threatening legal action:

WASHINGTON (AP) — A woman who settled a sexual harassment complaint against GOP presidential candidate Herman Cain in 1999 complained three years later at her next job about unfair treatment, saying she should be allowed to work from home after a serious car accident and accusing a manager of circulating a sexually charged email, The Associated Press has learned.

Karen Kraushaar, 55, filed the complaint while working as a spokeswoman at the Immigration and Naturalization Service in the Justice Department in late 2002 or early 2003, with the assistance of her lawyer, Joel Bennett, who also handled her earlier sexual harassment complaint against Cain in 1999. Three former supervisors familiar with Kraushaar's complaint, which did not include a claim of sexual harassment, described it for the AP under condition of anonymity because the matter was handled internally by the agency and was not public.

3. The Cain accuser who came forward with legal gunslinger Gloria Allred at her side has now acknowledged that she has a problematical history:

WASHINGTON — Her motives and personal history under scrutiny, the woman who publicly has accused Republican presidential candidate Herman Cain of groping her inside a parked car in July 1997 says she came forward out of duty.

Cain rejected Sharon Bialek’s claims as “totally fabricated,” with his campaign pointedly noting her history of bankruptcies, unpaid debts and legal troubles.

“I tried to remember if I recognized her, and I didn’t,” Cain said at a Tuesday news conference. “I tried to remember if I remembered that name, and I didn’t. The charges and allegations, I absolutely reject. They simply didn’t happen.”

Now, in fairness, we should point out that, because these women have something of a history, does not make them liars or the charges untrue.  This story is going to go on.  There may be corroborating evidence somewhere, either way.  Ms. Kraushaar has now apparently waived privacy rights involving the complaint she filed against Cain at the National Restaurant Association, which means she can release original documents. 

Each day brings new delights.  What is fascinating, though, is that the charges against Cain pale by comparison to those against Bill Clinton.  He's still going.

November 9, 2011       Permalink

IRAN WEEK – AT 7:21 A.M. ET:  The International Atomic Energy Agency, now under honest management after years under the corrupt leadership of Mohamed ElBaradei, has now issued its report on the Iranian nuclear program.  It is devastating.

United Nations weapons inspectors have amassed a trove of new evidence that they say makes a “credible” case that “Iran has carried out activities relevant to the development of a nuclear device,” and that the project may still be under way.

The long-awaited report, released by the International Atomic Energy Agency on Tuesday, represents the strongest judgment the agency has issued in its decade-long struggle to pierce the secrecy surrounding the Iranian program. The findings, drawn from evidence of far greater scope and depth than the agency has previously made public, have already rekindled a debate among the Western allies and Israel about whether increased diplomatic pressure, sanctions, sabotage or military action could stop Iran’s program.

The report reflects common sense.  Iran is moving a good part of its program into hardened underground bunkers, something one needn't do if the facilities are designed to provide power for hair dryers and iPod chargers. 

But, as could be expected, the report was greeted by a big yawn by much of the mainstream media.  Some media types were eager to wonder out loud whether the intelligence was "flawed," reminding us of the intelligence failure regarding WMD in Iraq.  After all, one must give crazed enemies the benefit of the doubt.  You know, that little man with the mustache in Berlin, he really doesn't mean it.

And how could an Iranian bomb compete in importance with Michael Jackson's doctor or Herman Cain's accusers?

The key element now is what to do about the report.  Already there are those who are trying to shift attention away from the Iranian bomb and toward attempts to prevent any dramatic action, like a military strike, to stop it.

There is no chance for increased UN sanctions.  China and Russia, two nations that regularly thumb their noses at Obama's "outreach," have made it clear they'd veto increased action in the Security Council.  What remains is action by individual nations, but there is a huge problem.  The only effective sanctions left would have to be directed at Iran's energy sector, and that would mean higher oil prices here right before an election.  Not a good prospect.

Besides, sanctions have not had much of an effect on the nuclear program.

That leaves the possibility of a military strike.  France has already stated its opposition.  Obama sent Defense Secretary Panetta to Israel recently to pressure the Israelis not to do it.  Tehran must be smiling.

But the threat is dire, with the possibility of one of the world's most irrational regimes in possession of nuclear weapons, which could even be shared with terrorist groups.

The deciding factor may be something rather stunning...that Arab nations are quietly lining up behind the idea of a military strike.

As speculation grows over Israeli or American plans to attack Iran’s nuclear facilities, questions are being raised over Arab support for a military strike. Last year’s WikiLeaks trove of US diplomatic cables showed unanimous support among Arab rulers for military action. Then as now, however, in public, those same rulers have remained tight-lipped.

Saudi support, in particular, is said to be strong.  I would not be shocked at an Israeli strike, done with the tacit approval, and assistance, of some Arab nations, and with quiet help from the U.S. and possibly Britain.  It is murky, but the threat is now widely understood. 

As we noted, a military strike before the 2012 election, if it is understood to have Obama's quiet support, could help him seal the deal with the voters.  That may sound cynical, but that's the way the world works.

November 9, 2011         Permalink

VIRGINIA UPDATE – AT 7:09 A.M. ET:  We reported last night that, as of that moment, it appeared the Republicans would fall just short of taking control of the Virginia state Senate.  What a difference a night's sleep makes.

It now appears, although it is not certain, that there's been a change.  Republicans, as of the latest count, have a good chance of tying the Senate.  With the presiding officer a tie-breaking Republican, Republicans will have a tiny working majority, if the vote holds.  (The GOP candidate in the deciding race is ahead by only 86 votes.)  However, committees will be tied, making it difficult for Republicans to bring favored bills to the floor. 

For Dems, the results could have been much worse, with some pundits predicting a major Republican takeover.

Why is this important?  Because the GOP governor, Bob McDonnell, is becoming a national figure, with at least a chance of being on the Republican presidential ticket in the second spot next year.  Or, he could be a major contender in 2016 if the Republicans lose to Obama in 2012.  State victories count toward a governor's political appeal.

Meanwhile, the Republicans increased their control of the state's House of Delegates, and now have the largest majority they've ever had in the lower house.  All good for McDonnell.

Virginia is a swing state.  It will still be tough for the Republicans next year because northern Virginia, with its vast number of federal employees, has become a major Democratic enclave.  But, bit by bit, McDonnell is building the Republican base and running a solid state administration.

So stand by for the final outcome in the state Senate.

November 9, 2011        Permalink